mikes425
Commander
generally happy in semi-retirement and dividend income-land
Posts: 126
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Post by mikes425 on Sept 2, 2022 2:13:03 GMT
I'm not market timer. Obviously I have held VCSH, VGIT, SCHO and BAB - and a number of other bond funds through the course
of the last year's losses - As longstanding components of the diversification of the FI side of my 50/50 PF. If there's more damage
to come to the NAV it would seem that of these, VCSH, IG corp bond - would be a more favorable place to be in the coming months
than treasury. After steep losses in these positions i don't know if 'now' is the time to be reallocating out of these positions but
i do sense that IG corporates might have great risk/reward than say, the others mentioned. Setting aside that many here may
have totally condescending views on having continued to tide these without trying to time the market - and sustaining the largest
NAV losses in these holdings vs Equity funds. Just looking at the specific question at hand. I appreciate any perspective but
please spare me any abuse about bond funds. All of these are relatively short to ultra-short duration except VGIT. Yeah, I get it.
They are about as predictable as can be insofar as possible further decline in NAV but i'm trying to be constructive here and weigh w
whether at this point it's even worth an allocation shift from one bond category to another -- but i do feel there's some merit to
the IG bond case over treasury, at least. Thanks for any thoughts.
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Post by steadyeddy on Sept 2, 2022 12:24:34 GMT
mikes425, In my opinion, it is not worth shifting from one bond category to another at this point. The majority of the paper losses are here already. I am just "grinning and bearing" it. There is going to be a time (hopefully in the near future) where the Fed would pivot. Bonds will begin recovery as soon as the market feels the Fed would start to pause rate hikes. And I expect this pivot in 1Q2023. What I am doing is to deploy new money into bond CEFs which I really think offer much better risk/reward than bond ETFs. That is something to consider. Hang in there and good luck.
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Post by Chahta on Sept 2, 2022 12:50:33 GMT
Why lament losses? You are reinvesting cheaply and building for the day to reap higher income. That is what a portfolio is there to provide. In the meantime, hopefully you have cash or other income streams to live on. Investing is about buying low, no? Sure I don't relish seeing my portfolio value drop but nothing is gained or lost unless there is a sale. You still own the shares.
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Post by FD1000 on Sept 2, 2022 21:08:58 GMT
I'm not market timer. Obviously I have held VCSH, VGIT, SCHO and BAB - and a number of other bond funds through the course of the last year's losses - As longstanding components of the diversification of the FI side of my 50/50 PF. If there's more damage to come to the NAV it would seem that of these, VCSH, IG corp bond - would be a more favorable place to be in the coming months than treasury. After steep losses in these positions i don't know if 'now' is the time to be reallocating out of these positions but
i do sense that IG corporates might have great risk/reward than say, the others mentioned. Setting aside that many here may have totally condescending views on having continued to tide these without trying to time the market - and sustaining the largest NAV losses in these holdings vs Equity funds. Just looking at the specific question at hand. I appreciate any perspective but please spare me any abuse about bond funds. All of these are relatively short to ultra-short duration except VGIT. Yeah, I get it. They are about as predictable as can be insofar as possible further decline in NAV but i'm trying to be constructive here and weigh w whether at this point it's even worth an allocation shift from one bond category to another -- but i do feel there's some merit to
the IG bond case over treasury, at least. Thanks for any thoughts. If you are a timer, you are too late to sell. If you are not a timer, why start trading now? Let me guess, you are looking for a specific bond funds + telling you when to switch, which is timing. Is this correct? |
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Deleted
Deleted Member
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Post by Deleted on Sept 2, 2022 22:58:56 GMT
mikes425,
If you are asking if this is a good time to increase risk, I'd say it is better time than 6 months or a year ago. Personally, I'd be more likely to increase my equity allocation a little to accomplish that, but moving from Treasuries to corporates will work too.
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mikes425
Commander
generally happy in semi-retirement and dividend income-land
Posts: 126
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Post by mikes425 on Sept 2, 2022 23:01:20 GMT
Replying to FD1000: I think my original post is pretty clear. Yeah I guess you can characterize it as asking for a specific fund recommendation but I thought I mentioned, specifically VCSH, relative to "IG Corp Bond" exposure vs Treasuries. So...yeah I guess that is in effect, asking for a specific recommendation. No confrontation intended.
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mikes425
Commander
generally happy in semi-retirement and dividend income-land
Posts: 126
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Post by mikes425 on Sept 2, 2022 23:10:40 GMT
mikes425, If you are asking if this is a good time to increase risk, I'd say it is better time than 6 months or a year ago. Personally, I'd be more likely to increase my equity allocation a little to accomplish that, but moving from Treasuries to corporates will work too. Thanks. I am inheriting about 100k in blue chip stocks within the next couple of months with my mother's Estate settlement so i guess that effectively will accomplish that by default. I was also interested in whether it might be logical to reduce a large stake in VGIT - which is among my top 3 biggest PF losers and put proceeds into VCSH - which is the closest thing I have to IG bond sector exposure. Schwab seems to be editoralizing that it is a more profitable sector -generally speaking - than treasuries during the current and ongoing volatility of the market. |
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mikes425
Commander
generally happy in semi-retirement and dividend income-land
Posts: 126
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Post by mikes425 on Sept 2, 2022 23:14:19 GMT
mikes425 , In my opinion, it is not worth shifting from one bond category to another at this point. The majority of the paper losses are here already. I am just "grinning and bearing" it. There is going to be a time (hopefully in the near future) where the Fed would pivot. Bonds will begin recovery as soon as the market feels the Fed would start to pause rate hikes. And I expect this pivot in 1Q2023. What I am doing is to deploy new money into bond CEFs which I really think offer much better risk/reward than bond ETFs. That is something to consider. Hang in there and good luck. Great point and I appreciate your sentiments. Thanks and good luck to you as well. |
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Post by FD1000 on Sept 2, 2022 23:20:26 GMT
I would look at the forum Bond Brigate where we discuss bonds, then third thread called Vanguard says.
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Post by steelpony10 on Sept 3, 2022 0:17:28 GMT
mikes425 , Your post makes it sound like portfolio management is brain surgery. If you have a set plan then stick with it. It’s way easier. There is no answer that predicts your future or any decisions you make. I think I take a whole different view of the word “losses” that makes your situation not so bad to me. How about consolidating to one or two bond funds that provide enough cash flow to meet your needs? Choose one or two and stick with it and change only when a holding no longer fits the plan or your needs change. In the short term balances go up and down for a variety of reasons most completely out of your hands. You have to have faith and great patience that eventually markets will take the next step up and values will rise again making your portfolio worth more in the long run. Your bonds will pay out more also depending on the average maturity and FED rate increases making your cash flow larger. Edit: As far as conventional bonds we are currently using PONAX and VWAHX for our excess income. Those managers are top notch. .
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Post by anitya on Sept 3, 2022 1:45:17 GMT
I would look at the forum Bond Brigate where we discuss bonds, then third thread called Vanguard says. I tried google search for both Bond Brigate and Bond Brigade and none of google search suggestions were inviting to click on. Do you mind providing a link to the forum? Thanks. |
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Post by FD1000 on Sept 3, 2022 4:13:34 GMT
I would look at the forum Bond Brigate where we discuss bonds, then third thread called Vanguard says. I tried google search for both Bond Brigate and Bond Brigade and none of google search suggestions were inviting to click on. Do you mind providing a link to the forum? Thanks. Go to the home of BIG BANG and start looking for boards on the left. Attachments:
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Post by chang on Sept 3, 2022 9:01:42 GMT
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Post by retiredat48 on Sept 3, 2022 16:00:11 GMT
mikes425 ,...Hi again Mike... I think I had you on distribution for my posting e-mails I choose to send to my library...same as this DIY lady retiree who recently sent me this private message: " (R48)...You didn't just *say* you were exiting bonds, you stood up for the concept to big shots who were against the idea! I remember people ridiculing the very concept. Even the thought that Wellesley could ever do poorly!
I exited all bonds (PIMIX, PTIAX, Wellesley, Wellington, etc) because of what you said. Saved me a fortune! BTW, do you think it is safe to buy a little Wellesley now?------------------------------------------------- Yes Mike we make judgments along the way. Investing is not easy. And I recall you successfully increasing your once-meager stock allocation to a more balanced one. But for guidance remember the "Bond Rule of Thumb." That is: If you hold your bond funds for a period equal to fund duration (linked to average maturity), you will receive an annual rate of return approximating your starting yield...REGARDLESS OF THE DIRECTION OF INTEREST RATES. Your bond funds two years ago had a current yield. Yes, there was a big downturn in bonds recently (biggest of all time), however, this means the fund managers are rolling over bonds into much higher rate maturities. Your dividends are growing. You will approximately get your starting yield. Further, if you buy bond funds now, that is your new starting yield. Expect to get it over the duration holding time period. So should one buy now? I have chosen to wait longer as I consider fed is determined to get rates somewhat higher...like a 10 year Treasury goes to 4% yield. This would cause a small mark-to-market loss to existing LT fund holders; but you recoup over time with increasing dividends. I am parking money now in MM funds and Vanguard's two-year Treasury Bond Fund...and a same corp bond fund. Switching any money from one fund into another simply means you are starting with that new (lowered perhaps) asset value, but receiving higher yields/dividend payouts. You will not lose holding longer term. I personally think a ten year treasury bond yielding 4% will be in great, great demand by retirees, thus I consider anyone wanting any do so buying at 3.9%...front run it. This risk-free yield is hard to beat, and would make a good addition to your portfolio (which I know from past portfolio reviews!). What about inflation you ask? You use other assets (primarily stock funds)to hedge that risk. It is why you have an asset-allocated approach. Suggest funds like SCHD for good yield. Lastly, yes, include some corporate bond funds in the mix. Higher quality for now if you do. I would like to see a big bankruptcy (or two) be headline news for awhile, driving yields up (prices down) but perhaps that is in store only for next year...for buying any junk bond funds. They will have their day. I also think some leveraged CEFs such as PDO or PDI would fit as well-- now. Best wishes... R48
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